Breaking Glass Arguments
I got in a bit of an argument the other day at work about what was responsible for the housing boom and ultimately the recession. My colleague insisted blame be laid at the feet of the government, specifically Democrats, more specifically Fannie Mae and Freddie Mac. Urgh. I basically balked on what I thought was the ultimate cause because I think it (1) has multiple causes (2) is way too complicated for me to really understand without putting far more effort than I have to understanding it. But I was confident in saying that the evidence I’ve seen suggests that it was not our government sponsored mortgage lenders. Here is a graph with the accompanying commentary that supports my point.
Pray tell what caused the same boom and bust in these other nations?
And how could Fannie/Freddie or the CRA be responsible — that only applies to the US — when you have the same, global, coordinated rise in prices? (And you can add Korea and New Zealand to the chart above).
For those of you who still believe the political talking point that it was FNM/FRE/CRA’s fault, the question remains: What caused these other nations to boom the same time the USA did?
And if you can’t answer that, then what hope do we have that you will offer up empirical evidence that Fannie/Freddie/CRA caused this in light of the above?
I hope this glass house of an argument will come crashing down the same way the housing crash happened… people lost confidence in it.
(h/t: Brad DeLong)